Resource title

The impact of industry classification schemes on financial research

Resource image

image for OpenScout resource :: The impact of industry classification schemes on financial research

Resource description

This paper investigates industry classification systems. During the last 50 years there has been a considerable discussion of problems regarding the classification of economic data by industries. From my perspective, the central point of each classification is to determine a balance between aggregation of similar firms and differentiation between industries. This paper examines the structure and content of industrial classification schemes and how they affect financial research. I use classification systems provided by the Worldscope and the Compustat database. First, this study gives a detailed description of the structure and methodology of industrial classification systems and the relevance in leading finance and accounting journals. Second, I construct a benchmark classification system to measure the performance of different systems and provide evidence that some systems a more homogeneous in terms of value drivers than others. Third, I examine how multiple valuation is influenced by industry classification and show that the results vary significantly for different systems.

Resource author

Christian Weiner

Resource publisher

Resource publish date

Resource language


Resource content type


Resource resource URL

Resource license

Adapt according to the presented license agreement and reference the original author.